Russia's Avtovaz and Sollers to produce cars in Kazakhstan

Russia’s largest automakers Avtovaz and Sollers plan to jointly produce vehicles in Kazakhstan, according to President Vladimir Putin. This marks a step closer in driving the members of the Eurasian economic union closer.

The two Russian car producers are initially due to make up to 100,000 units annually, Putin said at a joint press conference with Kazakh President Nursultan Nazarbayev.

MoscowandAstana aremakingprogressineconomic cooperation "toasignificantdegree thankstotheeliminationof administrative barriers,” Russia’s President added. More specifically, “as a resultof the creation ofthe Common Economic Space,we gained several additional percent of GDP both for Russia and for the other participants in this process -Belarus andKazakhstan,"Putin said.

The move comes as part of the initiative to get rid of the major economic barriers between Russia, Kazakhstan and Belarus within a Eurasian economic union, which is set to be completed by 2015.

In November last year Avtovaz signed a memorandum on a joint venture to produce vehicles together with the Kazakhstan assembly plant Asia Auto and the state corporation Ertis. It was agreed then that about $500 million will be invested into the venture that’ll be producing 120,000 cars a year in Eastern Kazakhstan. Automobiles made in Kazakhstan will then be sold in Central Asia, Transcaucasia, as well as in the regions of Russia’s Siberia and Far East.

Sollers plants in Russia produce the UAZ 4X4, Japanese Isuzu trucks and Korean SsangYong automobiles. The group has also reached an agreement to produce automobiles under the Toyota and Mazda brands in Russia's Far East,and is a partner in the Ford-Sollers joint venture in Russia.

Earlier agreements between Avtovaz and Sollers include a deal to develop auto – component suppliers, sealed in November 2010.